A managed services or fixed-fee outsourcing model for application development and maintenance can ultimately yield major savings for IT organizations that embrace it. A well-planned managed service delivery contract for application maintenance can yield a 25 to 45 percent cost reduction over staff augmentation in the first year alone, according Steven Kirz, managing director with outsourcing consultancy Pace Harmon, with many organizations seeing 50 to 75 percent savings after five years.